DALLAS - Texas service sector activity expanded in July but at a slower pace, according to business executives responding to the Texas Service Sector Outlook Survey (TSSOS).

The survey is conducted monthly by the Dallas Fed to obtain a timely assessment of activity in the state's service sector, which represents 59% of the state economy and employs close to 7 million workers.

The TSSOS revenue index--a key measure of state service sector conditions--fell from 10.9 to 2.4, its lowest reading since May 2011.

Positive readings in the survey generally indicate expansion of service sector activity, while readings below zero generally indicate contraction.

Perceptions of broader economic conditions didn't change much in July. The general business activity index moved up from 7.3 to a reading of 8, and the company outlook index held steady at 2.

Upward pressure on selling prices eased in July. The selling prices index came in at 1.1, its lowest reading since December 2010.

Indexes of future service sector activity were flat or slightly up in July.

TSSOS also includes a component called the Texas Retail Outlook Survey, which uses information from respondents in the retail and wholesale sectors only.

Retail sales fell in July, according to business executives responding to the Texas Retail Outlook Survey. The sales index moved down from 7 to -3.6, its first negative reading since May 2011. Inventories rose.

Indexes of future retail sector activity remained in positive territory in July.

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